Understanding Customer Engagement for Video Businesses I Accenture

GETTING, HAVING, HOLDING.WHY CUSTOMER ENGAGEMENT NEEDS A NEW, DATA-DRIVEN, MULTIDISCIPLINARY APPROACH. 2Today’s digital consumers are spoiled for choice. They’ve never had as many options to access content – and those choices are only likely to keep expanding. Competing for consumers’ committed attention – and keeping them coming back for more – is becoming an increasingly tough challenge. 3A BIGGER PICTURE Understanding what customer engagement really means for different video business models and, crucially, how it’s created, measured and monetized is far from straightforward. How much content an individual consumes is the main, high-level metric to assess engagement. But it only shows one component of what is, in fact, a multi-dimensional driver of value. Other, less obvious metrics, such as frequency of access, recency, and the detail of user journey interactions, can also help build an overall picture of loyalty and churn propensity. Social media sentiment’s a useful guide, too. Overall, video businesses need to correlate user engagement and behavior on their products and services with the business value they’ll generate. It’s useful to think about engagement at 3 levels: •Service: Looking at, for example, customer acquisition journeys and how consumers are helped when they have a problem. •Product: How often customers come to use the product, how easy they find it to use, how easily they can find the content they want. •Content: How successfully individual pieces of content are being merchandised, how compelling customers find the content proposition. CONNECTING ENGAGEMENT WITH BUSINESS VALUEDepending on the business model, improving engagement relies on different levers. For SVOD organizations, pricing and packaging, product features (eg recommendations), above and below the line marketing and content mix would all play a specific role – and this would change over a customer lifespan.Figure 1: Number of OTT video services in the U.S. (2013-2017)Figure 2: Number of OTT video services subscriptions among all U.S. broadband households surveyed (2014-2018)Q1/2014Q2/2015Q1/2016Q3/2016Q1/2017Q1/20182 services1 service4+ services3 services0 services0%10%20%30%40%50%60%70%80%90%100%20132014201520162017Source: Parks AssociatesSource: Parks Associates-50050100150200250ClosedNewExistingOver the past 5 years OTT services in the U.S. has grown from 80 to 200 services available 4Understanding different user types, and noting when their behaviour differs from the norm, is crucial – for example customers who join to binge on a particular box set and then quit the product. A retention strategy there may be different to – say – an irregular sports fan. If companies can understand how specific segments behave (and why they do), they can persuade audience segments to explore the product more widely – and stay longer. For advertising models, the customer lifecycle is less relevant, but a frequently changing catalogue of compelling content is essential. Engagement is important for communications providers, who can take advantage of high-engagement products like digital video, music and games to drive revenues in lower-touch products like broadband. Some businesses will be seeking to own the digital interface with the consumer by providing them with direct access to a variety of digital media services from within their own product. So, for example, it’s important for a PayTV provider to understand the extent to which their customers are engaging with the exclusive content they want them to or with commodity, free-to-air content. But regardless of which model is in play, the product is at the center. How consumers feel about and use it ultimately defines their engagement and hence the value they would deliver. DISENGAGEMENT – PREDICTING CHURNChurn is predictable. There’s almost always a correlation between a consumer’s propensity to churn and the number of times and the frequency of product views and/or accesses. Analysis of usage at a European telco (see figure 3), comparing consumers who churned against more loyal customers, suggests that there is a “churner” pattern which can be detected well in advance.And early detection means that effective retention techniques can be applied in plenty of time - organizations can start to make the right interventions and make offers that would persuade users to stick with a product. They can decide what offer to make based on a quantitative view of the customer’s long-term value.For example, one leading Asian Pay TV business chose to offer a one-off voucher discount to customers – coupled with a targeted content marketing play – when it spotted that mobile consumption had started to decline for a user. The combination of this sweetener with a reminder of the range of relevant content on offer, drove a significant reduction in churn.Figure 3: Loyal customers logged in 10x more frequently and viewed an average of 10x more videos than churners in a monthly periodAvg # logins by cus